Why Crowdfunding for Startups is the Future of Fundraising

Unlocking New Opportunities for Founders and Investors

Author

Trey Layton
May 30, 2024

This is The Startup Breakdown, the only newsletter looking into the new Y Combinator companies that you need to know. By joining this growing community of hundreds of founders, investors, and other startup aficionados (think i spelled that right?), you're getting a firsthand look at the companies that may be the next Airbnb, Coinbase, or Reddit.

Premium subscribers include investors and YC-backed founders looking to stay ahead of the latest startup news.

The Future of Fundraising: Crowdfunding for Startups

Crowdfunding for startups has always been seen as a source of negative signal.

Admittedly, even I viewed crowdfunding for startups as a sign that serious investors wouldn't take the startup seriously, not exactly the reassurance I’m looking for as I sweat over which startup to invest my bank-breaking $100 in to hit a 100x return.

Even in past startups of my own, I opted not to sign up for one of the various platforms because I saw it as “beneath me” to have to beg family and followers to support my ideas.

Then I saw beehiiv raise $1 million in 2 hours as part of a larger $34 million series B led by NEA, Sapphire Sport, and Lightspeed Ventures, all massive and well-respected institutional investors, demonstrating the potential of crowdfunding for startups.

beehiiv certainly didn’t need to go the public to raise money. They had VCs throwing cash at them like a teenage girl hurling her bra at the stage at a Harry Styles concert.

This “community round” was a strategic choice, and for many startups (and everyday investors), this is the future of fundraising.

This round is accessible to all investors. You can invest in the next Airbnb, a local business, or even a treatment that might be acquired by Pfizer for a significant return on your investment.

The rest of this newsletter covers

  • why crowdfunding is the future

  • what the benefits are for investors and founders

  • step-by-step how to get started

One of my more tactical, immediately actionable pieces, so I’m confident that you will learn a ton.

Premium subscribers include investors and YC-backed founders looking to stay ahead of the latest startup news.

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  • Trump may be considering an advisory role for Elon should be be elected

    • This is far from a done deal, and anything that either of these two very volatile men say should be taken with a bit of caution, but Trump reportedly values Musk’s opinions on border and economic policy

    • The two have butted heads in a series of very public dick-measuring contests, but Musk has been vocally critical of the Biden administration, so this shouldn’t come as a crazy shock

    • Never forget this Trump quote:

When Elon Musk came to the White House asking me for help on all of his many subsidized projects, whether it’s electric cars that don’t drive long enough, driverless cars that crash, or rocketships to nowhere, without which subsidies he’d be worthless, and telling me how he was a big Trump fan and Republican, I could have said, ‘drop to your knees and beg,’ and he would have done it

Trump

  • Transaction settlement time is being cut

    • Currently, trades take 2 days to go through (T+2), but the new rule is speeding that up to require just one day for settlement

    • There will be some short-term pains as the system is implemented (see: failed trades), but this does represent a modernization of the financial system

    • If only this had been a thing during 2021… a major reason for Robinhood halting trades on meme stocks was that they were having to post too much collateral while customer trades were being settled

  • Google’s search algo might have been leaked… some important takeaways

    • Site authority and clicks are critical

    • Chrome data and various microservicers are used to rank results

    • Google values originality and short-form tokens. Translation: put the important stuff up front

  • In case you’re still trying to go viral and love to spend hours in CapCut to make this happen…

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Cheers to another day,

gatsby

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